Thursday, October 11, 2012

Election 2012: What Can Government Do for the Economy?

When I came up with the topic for this article, the thought in my head was that no matter who is president nothing will actually change in my daily life. As I thought about it more and more over the last three weeks, the answer is much more complicated. Not so complicated that it is hard to understand, simply that this issue has many more possible responses than an issue such as the death penalty. That is a yes or no, but what the government can do for the economy ranges from nothing to everything.

On the one hand, we start with communism, where the government (and ideally the people) owns and controls everything. In other words, in a communist government if they say that every family will live in a house and own a domestically manufactured car, they own the means of production to create that prosperity. In other words, the government can do it all. You are probably not thinking extreme enough. What if the government did not pay anyone with money? Instead it gave them food stamps and other credits for amenities. The logic is that the ideal person for the economy is someone who does not save any money, but spends all that he or she has, no more. In an economy of consumption that is the ideal participant. It is sustainable, neglecting retirement. However, the only way to get people to spend all of their income is through a communist government, even more communist than China. Once people start saving the economy as a whole contracts.

On the other hand, a government can do about nothing. The best example would be most new countries. Take a look at Iraq or Afghanistan right now. They have problems just keeping people safe and following a few laws, forget the economy.

Along those lines, Herbert Hoover, the last President to have a balanced budget and be from Iowa, basically enacted a fiscal cliff by raising taxes especially on the wealthy from 25 to 63% to pay for the programs that morphed into the New Deal.

Another example is debt relief throughout history. Unfortunately, my four minutes of Internet searching are failing to find a good source, but I understand, from a credible source, and have the report somewhere, probably in Wisconsin, that throughout ancient history a king would celebrate his wealth and success by forgiving huge swaths of debt. Boom! There we go, a source regarding debt forgiveness.

So there you have it, the government can do a huge variety and volume of programs for the economy. I know I didn't mention this particular election or the issues that we face in 2012, but this topic is bigger than us or this year. And I suppose that from my limited point of view this nation is so on edge and there are so many educated people worried about this issue that no matter who is President economically he will not run us into the ground. In other words, if taxes are lowered on the wealthy more than the middle class, roads are not repaired, and our education system goes down the tubes, among other economic decisions the government can make, the Occupy movement will seem like a spring pick nick. I am currently watching the vice-presidential debate and they are arguing over how different they are, and instead I hear how this country is on a slowish trend in the same general direction. That direction is healthcare reform, what that means... who knows, and tax reform and again who knows what that means.

Lastly, over at Planet Money they have created an economic platform that economists agree on. Before you click on the link know that it is so radical that I would not expect any of it to get implemented any time soon.

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